Last Tuesday the Office of Federal Housing Enterprise Oversight released its quarterly report on home price appreciation for the second quarter. Appreciation for the quarter was 1.17%, or 4.68% annualized. This is down from 2.2% (8.78% annualized) for 1Q06. The quarterly rate is the lowest rate of appreciation since the fourth quarter of 1999's 1.12%. The regulator also noted that the decline in the quarterly rate over the past year (from 3.65% in 2Q05) is the sharpest since it started the survey in 1975. In the latest report, five states - Maine, Massachusetts, Indiana, Ohio and Michigan - recorded negative home price appreciation for the quarter. This compares to only one state (Iowa) in the quarter release.

On a year-over-year basis, home prices were 10.06% higher in the second quarter compared to 12.77% in the first quarter. All states recorded year-over-year gains; however, many are down sharply from the previous report. For example, while Arizona continued to show the greatest home price growth from 3Q05 through 2Q06 at 24.1%, it was down from 32.8% reported in the year-over-year period for the first quarter. Florida remained the second fastest in year-over-year price growth at 21.3%, down from 26.6% in the previous report. Meanwhile, Hawaii dropped to 18.1% home price growth compared to 25% in the first quarter.

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